A rescue unravels

By Hugo Miller, Serena Saitto

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southcoasttoday.com

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Posted Nov. 5, 2013 at 12:01 AM

Posted Nov. 5, 2013 at 12:01 AM

» Social News

By Hugo Miller, Serena Saitto

and Alex Barinka

Bloomberg News

TORONTO — BlackBerry abandoned a plan to sell itself and began searching for a new chief executive officer after a $4.7 billion takeover bid collapsed, sending shares of the struggling smartphone maker plunging.

Fairfax Financial Holdings Ltd., BlackBerry's largest investor, walked away from its bid for the company, opting instead for a $1 billion bond deal and a management shake-up. Fairfax will invest $250 million in the convertible debentures, according to a statement Monday. CEO Thorsten Heins will step down, while former Sybase Inc. CEO John Chen becomes executive chairman, putting him in charge of the company's strategy.

The transaction, slated to be completed later this month, follows a six-week attempt by Fairfax to attract financing for its $4.7 billion bid, which would have taken the smartphone maker private. The $1 billion infusion will help stabilize the money-losing company as it burns cash, though BlackBerry will still pursue other deals and is now more open to the idea of a breakup, people familiar with the matter said.

"The important thing is, what is the strategy?" said James Moorman, an analyst with S&P Capital IQ in New York. "They have a chance, and they have a little more runway with the additional cash, but they need to start making some smart decisions."

BlackBerry shares fell as low as $6.40 in New York, sending the company's market value below $3.5 billion. The stock was already down 35 percent this year before Monday's tumble.

Chen will become interim CEO while Waterloo, Ont.-based BlackBerry seeks a permanent replacement. The 58-year-old previously executed a comeback plan at Sybase, which was acquired by SAP AG for $5.8 billion in 2010.

Fairfax, a Toronto-based investment firm, had been struggling to attract the financing for the deal, according to people familiar with the deliberations. It also never named any other members of its takeover coalition.

Without a concrete bid in the offing, investors are now left with a less attractive future, Moorman said.

"This is a little disturbing given all the talk of interested bidders," he said. "I've always thought going private would be the right step for them."